Welcome to the exponential age
The rise of a networked world fundamentally transforms the structure and organization of societies, economies, and the global order. In this exponential age, technology is no longer to be understood simply as a sector but more as a layer that underpins nearly everything we do, everywhere we do it. As the globe becomes virtually connected, new rules, norms, and institutions have to be designed to govern our digital future, and those who set the new rules will heavily influence the international order.
Artificial Intelligence promises to be the most disruptive new technology in the coming decade. It will be applied almost everywhere, from the tiniest microcontrollers to the most expansive cloud infrastructure. With expected breakthroughs in semiconductors optimized for machine learning and the general availability of quantum computers, companies and countries will have millions of times more computing power on which to run potent algorithms.
Those algorithms, in turn, will feed on a steady diet of data streams, some made possible only by the world’s hyperconnectedness. Having the most and best data, and the most advanced AI, will be key to countries’ economic competitiveness and military superiority. In this way, data and AI will reshape the 21st-century world order.
A fragmented geopolitical world
While digital technologies, until recently, have brought people closer together, geopolitics are decoupling the world. The United States and China are fighting each other for global leadership, but this great- power competition is not only about national security interests. On a more fundamental level, it is about a clash of ideologies and systems of governance.
In the aftermath of the global financial crisis and again in times of COVID-19, the Chinese leadership has presented its model of authoritarian capitalism as a successful alternative to liberal democracy. As it sees the advancement of liberal ideals as an existential threat to its legitimacy and power at home, it is promoting its alternative system of governance more openly around the world. Consider, for example, the Belt and Road Initiative, the most ambitious infrastructure plan in world history.
At the same time, the regime in Beijing tries to shield itself from outside influences and aims to go it alone on technology. The “Great Firewall” has enabled censorship, making international data flows more difficult, while more recently, the “Made in China 2025” and “Dual Circulation” policies envision China as a self-sufficient technological powerhouse instead of the world’s factory. Meanwhile, the United States has launched the Clean Network Initiative, a program that urges allies to exclude Chinese components from technology infrastructure, and threatens to sanction semiconductor companies that sell chips with U.S. components to Chinese telecoms giant Huawei.
On the most fundamental level, this decoupling is the result of a lack of trust. Both governments are wary of the potential for foreign interference and extortion. As this security dilemma is not going to disappear, the world needs to prepare for ongoing if not accelerated separation of the U.S. and Chinese tech spheres. This bifurcation will force most other countries in the world to take sides, as China and the United States more fervently promote their preferred regulations and norms on the global stage. The recent 5G debate is an early indication of how this contest will play out. Expect AI to become the new battleground.
Platform Geopolitics
As the entire world becomes a potential platform, whoever sets the rules stands to gain enormous fortune and geopolitical clout. It seems clear that there is a first-mover advantage, and large private platforms are in the lead. Digital platforms create marketplaces for consumers and businesses to exchange goods. They also create points of control and set standards for how the ecosystem works. The United States and China seek to play a decisive role in all of the platforms that are to be set up around the world in the years to come. Therefore “country-as-a-platform” strategies will become a more defining feature of geopolitics in the 2020s.
It is not surprising, then, that China ́s Belt and Road Initiative increasingly focuses on the digital domain. Via the “Digital Silk Road,” China links up with foreign markets and gets access to massive amounts of data. It can then use these new insights into its partner countries’ economies and societies to fine-tune its digital platforms. Meanwhile, China is also endeavoring to establish technical standards on the global level. By doing all this, China develops unique points of control throughout the digital economy. If successful, this strategy could fundamentally shift global trade and financial flows toward a China-centric economic order. It could even reshape political systems in participating countries.
To better understand what platform geopolitics will look like, we should compare the role that technology plays today with the role geography played in the 20th century. Then, geographical features such as mountains, oceans, or oil fields played a decisive role in shaping the relations among countries. Geography was destiny. Today, connectivity is destiny, and digital platforms are the principle enablers of connectivity. Those who run the platforms can decide who gets in and who has to stop at their digital border.
The more social and economic activities take place on digital platforms, the higher their geopolitical value. This is what platform geopolitics is about. And this is why it is so important that partners on both sides of the Atlantic begin to develop common platforms to position themselves in a fragmented geopolitical world in which technological change is accelerating.
The way forward. Developing transatlantic platforms
As new rules, regulations, and norms for how to apply AI across the globe are written in the coming decade, the bifurcation of the U.S. and Chinese tech spheres will likely prevent a global and multilateral approach. The increased competition between two distinct digital models across the world will heavily influence the transatlantic relationship.
The value of closer transatlantic AI cooperation is obvious, but looming disputes over technology will complicate efforts to show a united front. While both sides of the Atlantic share a common foundation of democratic values, they differ on key issues, such as data privacy, government surveillance, or the regulation of big tech. Nevertheless, the world’s democracies will have to find a middle ground and to agree on a comprehensive, multilateral approach to technology, the use of data, and the application of AI. The stakes are too high, and neither side can go it alone. To get ahead in global tech and AI dynamics, transatlantic partners should focus on three areas: shared data pools, secure supply chains and commercial-intelligence sharing, and norm-setting in global regulatory forums.
Develop shared data pools across the Atlantic
Data is a strategic resource. As with natural resources in the 20th century, access to and control over it could become a source of wealth and therefore a key driver of conflict and competition. Hence, combined U.S. and European data pools and unified regulation for data flows could give both sides of the Atlantic greater leverage, especially in the development of AI.
Data powers algorithms that then feed AI. Shared data pools across the Atlantic can foster new scientific insights and economic breakthroughs. Western countries, however, will have to iron out their own differences over data privacy. The U.S. government takes a more permissive stance on surveillance than the European Union, where a court recently struck down the transatlantic Privacy Shield agreement over the issue. Without data-protection regulations like those included in the Privacy Shield, sending data across the Atlantic gets more complicated. To find common ground, a pragmatic discussion on data issues needs to start now. The European Commission ́s proposal for a new EU-U.S. Trade and Technology Council, to oversee the uses and regulation of new technology, is a step in the right direction.
Next to data privacy, the regulation of Big Tech is another thorny issue. The European Commission sees the reach of huge U.S. tech companies as anti- competitive and seeks to rein them in. In the U.S. economy, however, Big Tech is the strongest growth market and a powerful asset in the ideological and geopolitical competition with China. A transatlantic regulatory agreement is therefore difficult to achieve, not least because Europe lacks big tech companies and their political leverage.
One area of complementarity though — where U.S. companies amass huge troves of consumer data and their European counterparts draw upon a larger universe of industrial data — could be an incentive to create shared data pools, and therefore to write harmonized regulations.
Shared data pools will also be important for national security and military interoperability among NATO countries. As the alliance’s planners look ahead to a future in which emerging and disruptive technologies, including AI, play a prominent role, better access to data will be crucial, as will an agreement on data protection and regulation.
In addition, debates regarding burden sharing within NATO will increasingly have a tech dimension in the era of AI. That might help European countries meet the NATO goal of spending 2 percent of their GDPs on defense, which has strained the transatlantic relationship these past four years. It’s probably easier to sell Europeans on technology investments, even for defense purposes, than on tanks and fighter jets.
Enhance technology supply-chain security and increase commercial intelligence sharing
The application of AI is impossible without chips, quantum computing, and the whole physical infrastructure on which to run the algorithms. As self- sufficiency in supply chains is rather impossible, governments will have to think hard and be prudent about their interdependencies (as the rush for protective gear in the pandemic has shown). Here, too, trust is important, whether in deciding who can run a country’s digital networks and the corresponding infrastructure or who can invest in AI and other technology startups or larger companies. As the U.S. and Chinese technology spheres diverge, so will their supply chains. Already, Taiwanese semiconductor company TSMC, one of only three makers of advanced chips used for 5G, is caught in a supply-and-sanctions tug of war between the United States and China.
Safeguarding the supply of chips has become incredibly important, and there are two options for closer transatlantic coordination here. First, Europe and North America could develop an integrated chip supply chain that could also include like-minded partners in the Asia-Pacific region. Second, partners on both sides of the Atlantic could make joint investments into the research and development of the specially designed chips that will be sought after to run increasingly tailor-made AI algorithms. This field is extremely expensive to enter, and enlightened help from Western governments could improve their economies ́ access to a key AI resource.
Likewise, friendly governments across the Atlantic should share more commercial intelligence. In the globalized economy of the last 30 years, governments around the world have welcomed foreign direct investment into their tech industries, but recently they have become wary of ceding a stake in critical technology companies to possibly malign foreign actors. AI is a key technology for future economic prosperity, but we are likely to see the emergence of only a handful of AI clusters globally, similar to the automobile industry. This digital transformation, however, will take huge investments, especially for AI startups. Given that many of these young companies do not even realize that their algorithms and technologies could have particular security or defense uses, governments will have an interest in where that capital comes from. A more institutionalized dialogue between startups and decision-makers from foreign and security affairs seems necessary, as does extended commercial-intelligence sharing across the Atlantic. A concept of “trusted capital” is an important step in formulating a more coherent transatlantic approach to technology.
Promote transatlantic norms and standards on the global level
A country’s regulations and standards in AI and other emerging technologies are in part a reflection of its values. For instance, are they driven more by concern for security and stability or for democracy, human rights, and the rule of law? Via its Belt and Road Initiative, China is increasingly setting standards and regulations across the globe. In Africa and the construction of smart cities, for example, many governments lack deep experience with regulatory affairs and are therefore inclined to adopt Chinese standards. Thus the continent with the highest population growth rate becomes more closely connected to the Chinese tech sphere, its algorithms, and its underlying values.
For transatlantic countries, the aim is to set global norms and standards to govern the use of data that ensure democratic values, freedom, and human rights. When speaking with one voice, the transatlantic community will have greater leverage in global discussions about AI norms and standards. In addition, a closely linked transatlantic technology sphere, with shared data pools and unified norms and standards, would be a sufficiently attractive market for companies across the globe to meet the regulatory criteria to do business there.
While the U.S. government’s traditionally lighter approach to regulation, and EU regulators’ heavier hand, might complicate efforts toward common U.S.-EU rules and standards, the two sides share a more profound kinship in their appreciation of democracy. The incoming U.S. administration ́s plan to organize a summit of democracies in the first half of 2021 is a sign of political emphasis that will clearly have a significant impact also on technology debates. In this spirit, the European Commission has proposed to start working on a transatlantic AI agreement with a human-centric approach that would become a blueprint for global standards aligned with U.S. and European values. This proposal builds on the work of the Organization for Economic Cooperation and Development ́s Global Partnership on Artificial Intelligence, with its focus on the “responsible and human-centric development and use” of AI.
The more pronounced the great-power competition, the more democracies will have to close ranks. When the United States and Europe speak with one voice for democracy, freedom, and the rule of law, they have more chance of shaping debates in the United Nation ́s International Telecommunication Union, where many of the future global tech regulations will be determined. It might not be on the radar of many policymakers, but this is a key forum where some of the most profound decisions shaping the future of the digital world order will be made.
Conclusion
We cannot anticipate all of the ways AI will shape global geopolitics, but history shows clearly that technological leadership brings military and economic advantages, and it allows countries to shape international norms according to their own interests. Today, the West ́s technological leadership can no longer be taken for granted. China is the most prominent challenger but likely not the last. Thinking more in terms of platform geopolitics and global scalability of policy approaches would be an important step to accommodate the transatlantic relationship in the digital age.
In these early days, Western policymakers must
▪ Develop shared pools of and common regulations for using the massive amount of data that crosses the Atlantic and is critical to fine-tuning AI algorithms. Companies around the world that want a presence in this desirable transatlantic data sphere would have to comply with its rules and regulations.
▪ Secure the steady supply of hard- and software components that are critical for the application of AI and other emerging technologies on transatlantic digital platforms. A coordinated transatlantic approach to supply-chain security and commercial-intelligence sharing will be important in the competition for economic and military supremacy.
▪ Speak with one transatlantic voice in global standards-setting forums in order to shape global regulation of digital platforms. While transatlantic partners might have significant differences on regulation, they share a fundamental belief in democracy, freedom, and the rule of law. These values can and should guide a transatlantic convergence on how to run digital platforms.
Article first published in The human program. A transatlantic agenda for reclaiming our digital future